DORANDA COLLEGE RANCHI

(A Constituent Unit of Ranchi University, Ranchi)

A PROJECT REPORT ON
“PROSPECTS AND CHALLENGES OF UNIFIED PAYMENTS
INTERFACE (UPI) FOR DIGITAL PAYMENT.”

IN PARTIAL FULFILLMENT OF BACHELOR OF COMMERCE PROGRAM, UNDER RANCHI

UNIVERSITY, RANCHI

UNDER THE GUIDANCE OF

[Link] KUMAR (DEPT. OF COMMERCE)

SUBMITTED BY:- ASHOK HEMBRAM

EXAM ROLL NO:- 20BC8170507

CLASS ROLL NO:-363
[Link] SEM 6
SESSION-2020-2023
 DECLARATION

ASHOK HEMBRAM hereby declare that the project title

“PROSPECTS AND CHALLENGES OF UNIFIED PAYMENTS
INTERFACE (UPI) FOR DIGITAL PAYMENT.”
has been
prepared by me and submitted under [Link] curriculum. All the
information, facts and figures are collected by me and are first hand in
nature.

Any resemblance from existing work is purely coincidental in

nature.

Name of Candidate:- ASHOK HEMBRAM Class

Roll No: - 363
Exam Roll No: - 20BC8170507
Session: - 2020-2023

Signature of the candidate

 CERTIFICATE

This is to certify that project has been submitted by ASHOK HEMBRAM a

student of [Link] semester VI, Session – 2020-2023 bearing Exam Roll No-
20BC8170507 of Doranda College, Ranchi on a given Topic

“GST THE IMPACT ON INDIAN ECONOMY”

This is for partial fulfillment or requirement for the award of BACHELOR OF

COMMERCE under Ranchi University, Ranchi. The work done by him is
appreciable
of an outstanding level. I wish him every success in his life.

INTERNALGUIDE HOD EXTERNAL

[Link] COMMERCE [Link] COMMERCE
([Link] KUMAR) (PROF ALKA DIVYA TIGGA)
 ACKNOWLEDGEMENT

I take this opportunity with much pleasure to thanks the all the people who have helped me through

the course of my journey toward producing this project. I sincerely thank my Project guide

_Dept of commerce, for his guidance, help and motivation. Apart from the

subject of my research, I learnt a lot from him, I am sure will be useful in different stage of my life. I

would like to express my gratitude To ALKA MAM HOD, Dept of Commerce, for his review and many

helpful comments. I am especially grateful to my colleagues for their assistance, criticism, and

useful insights. I would like to acknowledge the support and encouragement of my friends. My

sincere gratitude also goes to all those who instructed and taught me through the years. Finally,

this Project

would not have been possible without the confidence endurance and support of my family. My

family has always been a source of inspiration and encouragement. I wish to thanks my parents,

whose love, teaching and support have bought me this far.

ASHOK HEMBRAM
 TABLE OF CONTENT

CHAPTER NO DESCRIPTION PAGE NO

1. INTRODUCTION 6-21

2. LITRETURE REVIEW 22-35

3. RESEARCH METHODOLOGY 36-48

4. DATA RESEARCH 49-54

5. CONCLUSION AND SUGGESTION 55-58

6. BIBLOGRAPHY 59-61
 ABSTRACT

Digital payment systems have revolutionized the way individuals and businesses

conduct financial transactions, transforming traditional payment methods and

reshaping the global economy. This abstract provides an overview of the evolution

of digital payments, highlighting their key characteristics, benefits, challenges, and

future prospects.

The journey of digital payments began with the advent of electronic fund transfers,

which enabled the secure and swift transfer of funds between financial institutions.

The subsequent development of online banking and e-commerce platforms further

propelled the growth of digital payments, allowing consumers to make purchases

and transfer money electronically.

The emergence of mobile technology and the widespread adoption of smartphones

fueled the rise of mobile payment solutions. These solutions leverage near field

communication (NFC) or quick response (QR) codes to facilitate seamless

transactions, offering convenience and accessibility to a broader user base. The

integration of digital wallets and payment apps into smartphones has significantly

simplified payment processes, enabling users to make transactions with just a few

taps on their devices.

The benefits of digital payments are numerous. They offer enhanced security

through encryption technologies, reducing the risks associated with physical cash

handling and minimizing theoccurrence of fraudulent activities. Digital payments

also promote financial inclusion by providing individuals without access to

traditional banking services with an avenue to participate in the digital economy.

Additionally, digital transactions offer improved efficiency, allowing for faster

settlement times and streamlined reconciliation processes for businesses.

However, digital payments also face several challenges. Concerns regarding privacy,

data security, and potential cyber threats have raised questions about the robustness

of digital payment systems. Issues related to interoperability, standardization, and

regulatory frameworks pose obstacles to achieving a seamless global digital

payment infrastructure. Furthermore, the digital divide, particularly in developing

regions, limits the widespread adoption of digital payment solutions.

Looking ahead, the future of digital payments appears promising. Advancements in

blockchain technology and the rise of cryptocurrencies have introduced

decentralized payment systems, offering transparency, immutability, and enhanced

security. Furthermore, the integration of artificial intelligence and machine learning

algorithms into digital payment systems has the potential to enhance fraud detection

and prevention capabilities. As digital payments continue to evolve, collaborations

between financial institutions, technology companies, and regulators will play a

vital role in addressing challenges and unlocking the full potential of digital

transactions.
 INTRODUCTION
What is UPI?

UPI (Unified Payment Interface) is a digital innovation with an instant

payment option developed indigenously in India [61,86]. UPI works on a

technology known as Open API (Application Programming Interface). API

is a type of interface where parties can be linked with each other easily. If

there is no entry restriction on the users of an interface, it is called Open-API

[38,99]. UPI is based on Open API platform. UPI has been designed in such

a way that it serves three broad purposes altogether: 1) it is a mobile-based

app; 2) it is linked with AADHAR number; therefore, it can even work

without internet; and 3) it is extremely easy to use [61]. Moreover, it has

provided huge possibility for innovation and fintech firms can easily

integrate with it and provides value added services [41,60,77,96] UPI was

launched in India in 2016 with a view that it would provide a platform for

everyone in the country an easy and effective tool for digitalization of the

payment services [81,83]. However, UPI was also linked with GOI

(Government of India) as an innovative initiative for the financial inclusion.

A set of no frills accounts were open for all the non-banked people and all
the accounts were linked with UPI application to support for the financial

inclusion using UPI Tewari[93].

However, the real impact of UPI need to be ascertained. The resources are

always scarce and need to be used wisely. The policy makers and the

Government should know whether UPI is really making forays into

economic development or not. There are two policy level initiatives or focus

that Government can have regarding UPI. Firstly, UPI can always be used as

a tool to support digitalization of the financial services, mainly payment

services. Secondly, the focus of Government can be on using UPI for the

financial inclusion and economic development of the people.

However, before taking a plunge into one of the areas, the government

should have a understanding of the impact of UPI on the financial inclusion

and economic development of people. There are no studies which measures

the impact of UPI on the financial inclusion in India. UPI can be used in

more than one way, which is an innovation to suit the Indian requirement

especially to the hoi polloi. The studies which cover UPI are mainly for

Open-API and its relevance of the banking or for the financial transaction .
The serious requirement of assessment of the situation study and lack of any

study on such lines are the main motivation of this study.

We decided to study the impact of UPI on economic development using

structural equation modelling (SEM) approach due to following two main

reasons: 1) SEM observes the unobserved variables and helps in identifying

the cumulative effect of cause on the output along with taking care of mutual

covariance; and 2) UPI and its impact on financial development tend to be in

behavioural aspects, which can be better captured by SEM than conventional

econometric or deterministic analysis. Therefore, SEM was decided to be

used in the model

There are several ways in which this study could have been done using SEM.

The theoretical model proposed in the study, which is empirically tested,

takes into account the step wise approach. In the first stage, impact of UPI is

estimated on financial literacy. In the second step, the impact of literacy is

tested on financial inclusion. In the third and final step, the impact of

financial inclusion is studied on economic development. In addition to this,

the mediating role of financial stability and trust are also taken into account

in the broad model.

The main objectives of the study: 1) to assess the impact of UPI on financial

literacy and financial inclusion; 2) to explore the effect of UPI on the

economic development of the poor via financial literacy and financial

inclusion; 3) to evaluate the role of financial stability on the relationship

between literacy and financial inclusion; and 4) to evaluate the role of trust

on the relationship between financial inclusion and economic development.

HISTORY

In April 2009, National Payment Corporation of India (NPCI) was formed to

integrate all the payment mechanisms in India and make them uniform for all
retail payments. By March 2011, RBI found out that in India, only six non-
cash transactions were executed every year by an individual citizen while 10
million retailers accepted card-based payment. Around 145 million families
had no access to any form of banking. There was also the problem of
tackling black money and corruption that happened mostly in cash.

RBI in 2012 released a vision statement for a period of four years that
indicated commitment towards building a safe, efficient, accessible,
inclusive, interoperable and authorized payment and settlement system in
India. It was also part of the Green Initiative to decrease the usage of paper in
domestic payments market. UPI was officially launched in 2016 for public
use.

Under RBI guidance, NPCI became the primary body tasked with developing
a new payment system that is simple, secure, and interoperable. UPI works
on four pillar push-pull interoperable model where there will be
remitter/beneficiary front end PSP (payment service provider) and
remitter/beneficiary back end bank that settles the monetary transaction for
the users. According to CEO of Netmagic Solutions, UPI became one of the
most successful deep-tech financial innovations India has produced.

In December 2019, noting the success of UPI, Google suggested the

US Federal Reserve Board to follow UPI as example in developing FedNow,
[22]
 a real-time payment system for United States.

With exponential growth of UPI, India became the world's largest real-time
payment market with 25.50 billion annual transactions in 2020 per data
from ACI Worldwide and GlobalData, ahead of China and United States.

As per the Economist Intelligence Unit Report 2021, UPI made India a leader

in global real-time payment market followed by China and South Korea. After
the decision of Ministry of Finance to nullify merchant discount rate (MDR) in
2019 from UPI, the number of low value transactions skyrocketed making huge
gains on real-time transaction volume data. Nations such
as Brazil, Bahrain, Saudi Arabia, Singapore, United States and European
Union are now trying to emulate UPI in their own markets.

From January 1, 2019, UPI became a popular payment option for initial public
offerings (IPOs). The transaction limit was enhanced from ₹100,000 to
₹200,000 in March 2020. From December 2021, RBI again increased the
limit to ₹500,000 for Retail Direct Scheme and IPO applications. [29] To make
UPI economically feasible for payment companies, RBI is
considering merchant discount rate (MDR) on future UPI transactions.[30] In its
first monetary policy for financial year 2022–23, RBI proposed cardless cash
withdrawal facility from ATM using UPI based QR code.[31] In partnership
with NSDL Payments Bank and NPCI, ToneTag launched VoiceSE which
will enable 400 million feature phone users to make UPI payment using voice
in Hindi, Tamil, Telugu, Malayalam, Kannada, and Bengali languages.

UPI 2.O
On 16 August 2018, UPI 2.0 was launched which enabled users to link
their overdraft accounts to a UPI handle. Users were also able to pre-
authorise transactions by issuing a mandate for specific merchant. This
version also included a feature to view and store the invoice for the
transactions. An AutoPay facility for recurring payments was also added.[33]
[34][35]
 As of August 2021, State Bank of India, Bank of Baroda and Paytm
Payments Bank are live on UPI AutoPay each registering 660,000, 204,000,
and 186,000 mandates, respectively.[36] From 15 March 2022, Government
removed the need of debit card for UPI registration.[37] NPCI is planning to
expand AutoPay to international markets and operationalize real-time
payment dispute resolution mechanism covering 90% of the complaints by
September 2022.[38]

From 8 June 2022, RBI allowed linking RuPay credit cards with UPI.

Customers can now make credit card payments using UPI, in the absence of
a physical card.[39] NPCI developed a real-time feature that will reduce the 24
hours time period taken by banks to unblock funds over time-out or
transaction decline to 30 seconds.[40] The service was officially launched on
20 September 2022.[41] On 7 December 2022, RBI announced that UPI will
upgrade from single-block-single to single-block-multiple debit for recurring
transactions and investments in securities. The feature is expected to help the
user block funds for specific purpose and release it when needed.[42]

RBI on 6 April 2023 proposed allowing credit on UPI through pre-approved

bank lines which would help customers reduce their dependence on credit
cards.

UPI 123PAY
As part of financial inclusion initiative, NPCI with fintech start-up Naffa
Innovations with their product ToneTag in 2021 started working on
developing a voice-based payment service for feature phone users in low
connectivity zones over UPI payment ecosystem under Interactive Voice
Response (IVR) project. The system utilised Dual Tone Multi-
Frequency (DTMF) signalling technology with two-factor
authentication (2FA) flow for peer-to-peer (P2P) transaction. From
September 2020 to June 2021, it was under beta testing while awaiting RBI
approval for large scale deployment.[45] The beta testing and pilot
experiment were completed by October 2021 and RBI started formulating
guidelines for nationwide use.

The RBI governor Shaktikanta Das launched the service called UPI

123PAY on 8 March 2022, with an aim to help almost 400 million feature
phone users in the country.[47] Till now, UPI payments were only possible
through payment applications on smartphones and USSD-based service
for feature phones. But as per deputy governor T Rabi Shankar the latter has
been found to be cumbersome due to the unavailability of the services on
several mobile networks.

UPI 123PAY has four options for payment.

1. App based functionality where a mobile phone manufacturer can

install UPI app through over-the-air programming, that can be
used for payment.
2. Missed called based in which customer can use dedicated
merchant payment number by giving a missed call. The
incoming authentication call will ask for PIN verification to
complete the transaction.
3. Interactive Voice Response (IVR) based where the payment
transaction will complete using pre-defined phone numbers.
4. Payment in offline mode through sound based proximity data
communication.
As per NPCI, some of the early use cases involve FASTag recharges,
insurance payments, and EMI collections. As of 20 September 2022,
Ultracash Technologies in collaboration with Bharat Petroleum helped
200,000 active users make LPG booking and payment through UPI
123PAY.

INTERNATIONALIZATION

Around 777 million Indian consumers shopped across the border in 2021. To

make ease of payment, NPCI International Payments Limited (NIPL)
signed memorandum of understanding (MoU) with UK based PPRO
Financial on 17 November 2021 to expand the acceptance of UPI into
foreign markets, especially those in China and United States which account
for half of all international transaction coming from India.[51] On 26 January
2022, UK based fintech startup Transact365 enabled UPI for global
merchants with real time currency conversion facility that will help them do
business in India independent of local presence.[52] As per NPCI and RBI
mandate, banks, payment service providers (PSPs) and third-party
application providers (TPAPs) in India must enable international acceptance
through UPI from 30 September 2022.

With the release of Payments Vision 2025 document on 17 June 2022, RBI
will push for internationalization of UPI with nations using United States
dollar, Pound sterling and Euro under bilateral treaties. Ministry of External
Affairs (MEA) also actively pushing for internationalization of UPI due to
geopolitical concerns. But several countries including Canada are reluctant
to accept UPI due to push back from American firms. MEA is looking for
Central Bank to Central Bank transfer using UPI as the pipeline and a
collaborative effort if the countries have a similar system like UPI.[56] On 12
October 2022, India offered UPI and related technologies to Commonwealth
of Nations.
On 7 February 2023, PhonePe announced extending support of UPI for
international payments in UAE, Singapore, Mauritius, Nepal and Bhutan.
Users will be able to pay in international currency directly from Indian bank
accounts.[58] NIPL signed a definitive agreement with PPRO Financial on 27
April 2023 that will enable acceptance of UPI among international payment
service providers (PSPs) and global merchant acquirers.

UPI One World

RBI announced extending UPI payment facility for inbound travelers

from G20 countries.[60] Transcorp International will enable UPI One World
for nationals coming from G20 countries.

UPI Wallet

UPI Wallet facility has been introduced for foreign tourists in India, Once
set up, users can add funds using their preferred debit or credit card and
start scanning to pay at over 20 million stores in India with no commission
fee. The wallet's wide acceptance means it is convenient for tourists to
transact in any location, from roadside tea stalls to five-star resorts.[62]There
are apps for UPI wallet such as Cheque, UPI.

Remittance

Due to increasing remittances to India, NIPL with Western Union is

going to integrate UPI to help the Indian diaspora receive and send
money abroad with ease.[63] The service will become operational from
second quarter of 2022.[64] IndusInd Bank and Thailand based financial
service provider DeeMoney will use UPI ID to verify customers in India
for cross border transaction. This is part of Money Transfer Operator
(MTO) partners programme of NPCI.[65] IndusInd Bank is planning to
collaborate with more foreign entities to increase acceptability of UPI
abroad.[66] NIPL on 27 January 2022 signed MoU
with Netherlands based Terra Payment Services that will help UPI users
receive international payments from around the globe in real time.

To save the cost borne by Indians living abroad when sending money
back home, NPCI is planning to move 32 million expatriate population
from SWIFT to UPI.[68] The 2022 Russian invasion of Ukraine and
removal of Russian banks from SWIFT made development of an
alternative all the more important for Indian policy makers.

From 30 April 2023, international mobile numbers from Singapore,

Australia, Canada, Hong Kong, Oman, Qatar, USA, Saudi Arabia, UAE,
and UK will be able to access UPI transaction facility. It will be available
through non-resident external (NRE) and non-resident ordinary (NRO)
accounts.

SERVICE

For real-time payments from one bank account to another, any UPI client
app can be used and multiple bank accounts can be linked to a single app.
Money can be sent or requested using a user-created Virtual Payment
Address (VPA) or UPI ID for each bank account using the KYC-linked
mobile number. UPI also generates a specific QR code for each user
account for contactless payments.

Mobile apps

Any UPI app can be used to transfer funds from and to UPI enabled
banks. Apart from various third-party apps such as Google
Pay (previously Tez), PhonePe, Paytm, Amazon Pay, Airtel Payments
Bank, MobiKwik, Samsung Pay, WhatsApp Pay,[73] NPCI manages its
own app, BHIM.[74]

The total number of banks linked to UPI platform grew from 21 in April
2016 to 304 in February 2022.[75]

In June 2021, NPCI removed the restriction placed on WhatsApp on UPI

customer onboarding which until then was limited to 20 million users.
With 530 million registered users in the Indian market, WhatsApp could
then roll out UPI to all its customers.

On-Device wallet

NPCI called this feature UPI Lite. It can scan QR code without the need
of an internet connection. In phase 1, UPI Lite will process the debit
transaction offline while the credit will happen when the device goes
online. But the final goal is to achieve both credit and debit transaction
through offline mode. The upper limit of UPI Lite On-Device wallet is
₹2,000. Additional factor authentication or UPI AutoPay feature will be
used to securely load the desirable amount. Since 50% of UPI transactions
are below ₹200 with a higher frequency rate, the per transaction limit will
be maximum ₹200, as it creates a large backlog of volume which
increases the failure rate and affects the stability of the entire payment
network. To save electricity consumption and computing power of banks,
UPI mobile apps will have to support on-device wallet features as per the
RBI directive from December 2021. The in-built wallet will help in low-
value instant payment by using the infrastructure of the mobile app
developer, thus decreasing the load on banks through decentralization of
back-end infrastructure and resources.
Supported banks

The NPCI website lists the banks that facilitate UPI,[79] termed as Payment
Service Providers (PSP) – listed with their UPI application and handle –
and issuers.[79] PSP includes banks which have their own mobile
application to facilitate transaction and issuers include banks which don't
have their own payments interface and rely on third-party software for
transactions.

e-RUPI

e-RUPI
e-RUPI or e₹UPI (portmanteau of electronic Rupee and UPI)[80]
[81]
 developed in collaboration with Department of Financial
Services, Ministry of Health and Family Welfare and National Health
Authority. It was introduced from 2 August 2021. e-RUPI is to ensure
leak proof delivery of welfare services and bypassing middle man to
decrease corruption. Private sector can use the service for their
own corporate social responsibility initiative (CSR). e-RUPI is basically
e-voucher based on QR code or SMS string that can be delivered through
mobile phone.[82] e-RUPI will act as a precursor for future Central bank
digital currency (CBDC) that will be launched by RBI as it will help in
highlighting the gaps within the national digital payment infrastructure.

Financial Software and Systems (FSS) integrated e-RUPI on 1 December

2021 for financially underserved segments of the society.[85] Government
of Karnataka partnered with NPCI to provide student scholarship through
e-RUPI which can even be received on feature phones.

On September 20, RBI governor Shaktikanta Das officially launched UPI

Lite at Global Fintech Fest 2022. Canara Bank, HDFC Bank, Indian
Bank, Kotak Mahindra Bank, Punjab National Bank, State Bank of
India, Union Bank of India and Utkarsh Small Finance Bank enabled UPI
Lite feature on BHIM. Paytm Payments Bank on 15 February 2023 went
live with UPI Lite feature.

Market share
From 93,000 transactions in August 2016 valued at ₹30 million,
UPI generated 800 million transactions in March 2019 with a total
value of ₹1330 billion.[21] In June 2021, UPI recorded 1.94 million
IPO mandates that increased to 7.66 million in July.[87] This was the
highest ever since UPI was made mandatory by Securities and
Exchange Board of India for domestic retail investors for IPO
process.[88][89] By late August 2020, with 18 billion annual
transactions, UPI surpassed American Express in India. NITI
Aayog predicted that UPI will also surpass Visa and Mastercard by
2023.[90] UPI took three years to reach 1.14 billion in October 2019
while by the end of October 2020, the payment system registered
2.07 billion transactions.[20] In 2020, $457 billion worth of value was
moved on UPI platform which was 15% of India's GDP.

As of July 2021, UPI registered 432.5 million transactions that

accounted for ₹567,345 million with highest average daily
transaction of approximately 100 million that is double the amount
from July 2020.[92][93] As of August 2021, UPI forms 10% of all retail
payment in India.[94] PhonePe and Google Pay both recorded
1 billion transactions in August with a market share of 45.94% and
34.45% respectively in the UPI payment ecosystem
while Paytm took 11.94% share with ₹387.85 million transaction.[95]

From the financial year 2015–21, the domestic retail payment by

value on UPI grew at 18% at a compound annual growth rate
(CAGR) while between 2017 and 2021, the collective payment on
all forms of UPI grew at 400% CAGR. In the financial year 2021,
₹41 trillion (short scale) worth of money was exchanged on the UPI
platform that is 2.8 times the value of debit and credit card payment
at point of sale (POS) terminals and 20 times the value of digital
wallet and prepaid instruments in India.[94]

UPI registered 3.55 billion transactions in August 2021, a growth

of 9.56% from the previous month. In terms of value, ₹6.39 trillion
worth of money was transacted in August alone. From ₹3.2 trillion
to ₹6 trillion, the growth in value terms doubled between
September 2020 to July 2021.[96] It had reached an all-time high of
3.65 billion transactions worth ₹6.54 trillion in value since
inception in the month of September. By now the total transaction
for the year 2021, reached ₹50 trillion.[97]

UPI touched value of ₹7.71 trillion in October 2021 which is a

56% jump from September. As per NPCI, daily UPI payment for
the month of October is between ₹250 billion to ₹300 billion.
[98]
 Out of all UPI transactions done in the month of October, 54%
are Person-to-Person (P2P) while 46% were Person-to-Merchant
(P2M).[99] UPI reached $844 billion in value until November 2021.
[100]
 In December, the total transaction value on UPI reached
₹8.27 trillion with 99% annual growth rate. The largest share in $2
trillion of annual digital payment in India comes from UPI.[101] The
Q2 of 2022 saw 20.57 billion transactions worth ₹36.08 trillion as
per Worldline SA. P2P accounted for 49% in volume and 67% in
value while P2M accounted for 34% in volume and 17% in value.
[102]
 As per CEO Dilip Asbe of NPCI, P2M as of November 2022
accounts for more than 50% of UPI transaction volumes.[103] In
2019, UPI accounted 17% of ₹3,100 crore digital transactions
which in 2022 accounted 52% of ₹8,840 crore of digital
transactions.[104]

No. of Banks live on Transaction Volume (in INR Value (in USD Value (in
Year
UPI Mn) Cr.) Billions)

2022 382 74,044.48 12,594,818.73 1,699.71

 No. of Banks live on Transaction Volume (in INR Value (in USD Value (in
Year
UPI Mn) Cr.) Billions)

2021 282 38,744.55 7,159,285.80 966.17

2020 207 18,880.89 3,387,744.72 457.19

2019 144 10,787.54 1,836,638.18 247.86

2018 129 3,746.32 585,710.45 79.04

2017 67 418.8 57,020.87 7.7

2016 35 2.65 893.07 0.12

source - NPCI portal
~this data excludes the transactions having debit/credit to the same account for the month of August
2018 onwards
App Wise Market Share
Transaction Value Transaction Number (In
App % Rank % Rank
(₹) Million)

49.25
PhonePe 5,247,424,900,000 1 2,993.83 47.33% 1
%

34.42
Google Pay 3,666,690,900,000 2 2,130.63 33.68% 2
%

10.43
PayTM 1,111,496,600,000 3 933.88 14.76% 3
%

Cred 197,164,300,000 1.85% 4 14.89 0.24% 9

Yes Bank Apps 152,360,400,000 1.43% 5 60.80 0.96% 5

ICICI Bank Apps 115,092,900,000 1.08% 6 37.34 0.59% 7

BHIM 78,239,500,000 0.73% 7 24.48 0.39% 8

Amazon Pay 67,518,000,000 0.63% 8 68.77 1.09% 4

Axis Bank Apps 12,139,500,000 0.11% 9 53.99 0.85% 6

Airtel Payments App 5,552,600,000 0.05% 10 7.41 0.12% 10

Market cap

On 26 March 2021, NPCI defined standard operating procedure for

third-party payment providers on 30% market cap. The limit will be
calculated on the basis of total volume of transactions processed
over UPI during the preceding three months on a rolling basis
starting from 1 January 2021. Compliance deadline is until
December 2023. NPCI will push first alert through an email or a
letter to third-party payment providers and their partner banks
when UPI transactions hits 25-27% threshold which payment
providers must acknowledge. In return, payment providers will
send second alert to NPCI with evidence on the steps taken for
compliance.

In case 30% mark is breached, payment providers and banks must

stop new user on-boarding. In special cases, payment providers
and banks may get an exemption of 6 months for compliance. The
report of breaching 30% market cap must reach NPCI within first
five working days with plan for corrective measures.
 During the same period, payment providers and banks must
inform new customers about the issue. Non compliance of market
cap bring penalties under UPI procedural guidelines. NPCI will
check operating procedures of UPI every 6 months to meet
objectives without creating inconvenience for end users.
PhonePe made a formal request to NPCI to defer 30% market cap
deadline from January 2023 to January 2026. NPCI is discussing
this issue with RBI and Government. Industry stakeholders want to
do away with 30% market cap proposed by NPCI, instead want
organic growth based on customer demand.

Implementation is another contentious issue since it results in

blocking existing users from performing payment to maintain 30%
market cap which is not feasible from business point of view.

RBI also started looking for solutions to fix the duopoly situation
created by Google Pay and PhonePe.[107] Both the players will get
two additional years till 31 December 2024 to fix their market cap.

Acceptance
Domestic

India
Talks with the United Arab Emirates and Singapore, both of which have
sizeable Indian expatriate populations, have begun regarding the operation
of UPI in those countries; this would also facilitate ease of payment for
Indian tourists traveling there. A committee on digital payments led
by Nandan Nilekani had suggested that NPCI should internationalise
payment services like UPI, RuPay and BHIM.[109] NPCI is planning to link
UPI with standalone mobile wallets so that users can transfer money from
one provider to another one which until now is restricted due to use of
closed source technology. There is also provision for off-line UPI
payment through the use of near field communication (NFC).

From 5 September 2019, Play Store enabled UPI for purchasing apps,

games and in-app content.[111] On 20 April 2020, Google added support
for UPI payment in India to buy membership of YouTube
Premium and YouTube Music either directly through a website or on the
mobile application. Now Indian users can also buy or rent movies
from Google TV. UPI is also enabled for the YouTube SuperChat feature.

From July 2021, Apple iPhone, iPad, and IPod Touch users in India can

use UPI on App Store and iTunes Store. As of 2021 NPCI International
Payments Limited (NIPL) was planning to extend UPI to markets in the
United States, West Asia and Europe. On 4 August 2021, ICICI
Prudential Life Insurance started supporting UPI AutoPay feature for
insurance payment.

In August 2021, Dish TV introduced UPI scan and pay feature for the first
time in a nationwide rollout due to COVID-19 restriction and heavy
demand for no contact digital payment solutions.[117] From 31 August
2021, Netflix integrated UPI AutoPay feature for Indian subscribers
which was until now limited to credit and debit cards
from Visa, Mastercard, American Express, and Diners Club International.
[118]
 As per April 2021 RBI Monetary Policy Committee directive, after
March 31, 2022, all the know you customer (KYC) compliant digital
wallets will become interoperable by using UPI system.[119] In August
2021, Hotstar started supporting UPI AutoPay feature. The Hindu, Times
Prime, PayU, Financial Software and Systems, Testbook Edu Solutions,
Open Financial Technologies, Angel Broking and 5Paisa Capital moved
to UPI AutoPay in September 2021.[120]
Due to high usage, Samsung Electronics integrated UPI barcode
scanner directly into mobile camera application for faster payment.[121] On
3 January 2022, SonyLIV launched UPI AutoPay for all its subscribers.
[122]
 NPCI with Jio introduced UPI AutoPay for prepaid and postpaid
mobile subscribers from 6 January 2022.[123] Tata Mutual Fund with
CAMSPay enabled UPI AutoPay feature for Systematic Investment
Plan (SIP) from July 2022.[124] Google Play started supporting UPI
AutoPay for subscription services from 15 November 2022.[125] Bangalore
Metropolitan Transport Corporation (BMTC) will start UPI based
ticketing system from 2023.

International

Cross border digital payment service provider Liquid Group

signed memorandum of understanding (MoU) with NIPL in September
2021 to introduce UPI based QR code payment system
in Singapore, Malaysia, Thailand, Philippines, Vietnam, Cambodia, Hong
Kong, Taiwan, South Korea, and Japan from 2022.[127][128] NIPL signed
MoU with Arab Monetary Fund (AMF) on 8 March 2022 to link UPI with
Buna Payment Platform that is connected with the central banks and
financial institutions from Arab region. This will help in cross border
multi currency transaction.[129][130] Till 4 July 2022, India already initiated
talks with 30 countries for UPI integration.

HOW DOES UPI WORK?

The user will only have to use a virtual address, known as a Virtual
Payment Address (VPA) to carry out any transaction. UPI has been
developed by the National Payments Corporation of India (NPCI) and
is regulated by the Reserve Bank of India (RBI). UPI is slowly
becoming the most preferred form of digital payment. The below-
mentioned things are required to transfer funds via UPI:

 A smartphone
 An active bank account
 The mobile number must be active and linked to the bank account
 Internet connection

UPI is slowly becoming the most preferred form of digital payment.

The UPI interface is compatible with most banks and many digital
wallets, and payment applications are embracing UPI. Some of the apps
include Google Tez, Paytm, PhonePe and the like.

Participants in UPI:
1. Remitter bank
2. Beneficiary bank
3. NPCI
4. Merchants
5. Bank account holder
6. Payer PSP
7. Payee PSP

Benefits of UPI for Banks:

 There is a universal application for one transaction
 This is a single click Two Factor authentication
 It is safer and more secure
 It enables easy transactions
 Unique Identifier
 Payment basis Single

Benefits of UPI for Merchants:

  Easier fund collection
 There is no risk of storing the customer's virtual address
 This is suitable for e-Com and m-Com transaction
 Tap customers do not need credit/debit cards
 In-App Payments (IAP)
 It resolves the hassle of cash on delivery

Benefits for UPI for Customers:

 It is a single application for accessing various bank accounts
 There is round the clock availability
 You can easily raise a complaint from the mobile app directly
 The use of Virtual ID is secure

Steps to Register:
 You need to download the UPI app from the App Store.
 You can also create your profile by typing in details like your
virtual id (payment address), name, and password.
 You can go to 'Add/Link/Manage Bank Account' option and then
link the bank and account number with the virtual ID.

Generating UPI - PIN:

 You can select the bank account from which you want to initiate
the payment, and follow with any of these options:

What Makes Unified Payments Interface

Unique
These features make UPI a very unique platform:

 There is just one singe mobile app to access various bank

accounts.
 It facilitates the Immediate transfer of money via mobile devices
24*7.
  The virtual address of the customer for any kind of 'Pull & Push'
offers security. The customer does not have to enter information
like card number, IFSC code or account number.
 With one click, there is a two-factor Authentication - Aligned with
the Regulatory guidelines, and also provides a seamless single
click payment.
 Negates the hassle of cash on delivery, or even going to an ATM.
 You can easily share your bills with friends.
 Over the Counter Payments, Barcode (Scan and Pay) based
payments, and Utility Bill Payments can be made.
 You can make merchant payment with a single app or in-app
payments.
 You can raise complaints directly from the mobile app.
 You can make donations, disbursements, and collections easily.

Performing a UPI Transaction

PUSH
This is when you send money using a virtual address:

 You should log into the UPI application

 Once you login, you can select 'Send Money/Payment'
 Key in the beneficiary's/payee virtual id, account to be debited,
and amount
 You will see a confirmation on the screen
 Enter the UPI PIN
 You will get a message on the same.

PULL
This is when you request money:

 You should log into the UPI application

 Once you login, you can select 'Request Money/Payment'
 Key in the beneficiary's/payee virtual id, account to be credited,
and amount
 You will see a confirmation on the screen
 Enter the UPI PIN
 You will get a message on the same.
 The payer will also get a notification for the request of money
  The payer will click on the notification and review the payment
 He/she can decide to accept or decline
 If the payment is accepted, the payer will enter the UPI PIN and
authorise the transaction
 The payer will get a 'successful or decline' notification
 You will get a notification and SMS from the bank.

UPI Fees and Charges

There are no fees and charges applicable to the UPI platform. The UPI
programme was launched with the aim to promote digital transactions.
The NCPI had earlier marked the transaction charges to be 50 paise per
transaction. However, the Government of India had later cancelled these
charges to make sure that more and more people started using the
platform.
UPI vs. Cards and Cash
The main aim of the UPI applications is to promote digital transactions
and paving way for a cashless economy. With UPI, users can avail the
benefit of not carrying physical cash or any form of plastic money. All
transactions can be taken care of using their smartphones.

How secure are UPI transactions

UPI transactions are secured using UPI PINs which is a 4-6 digit
numerical combination. In addition to that, the applications are highly
encrypted and has heavy bandwidth capacity.

Banks Which Offer The UPI Facility

The main banks that offer the UPI facility are given below:

Banks Offering The UPI Facility

Airtel Payments Bank HSBC

Andhra Bank Indian Bank

Bank of Baroda ICICI Bank

Allahabad Bank IndusInd Bank

Bank of India State Bank of India

Canara Bank Kotak Mahindra Bank

City Union Bank Union Bank of India

DBS Digibank Paytm Payments Bank

Federal Bank YES Bank

HDFC Bank Punjab Nation Bank

Apps with UPI Feature in India

Below is the list of App that provides UPI Feature:

 PhonePe
 Paytm
 BHIM app
 MobiKwik
 Google Tez
 Uber
 Chillr
 Paytm Payments Bank
 SBI Pay

CHALLENGES:
The Unified Payments Interface (UPI) for digital payments
has experienced significant growth and adoption. However,
it also faces several challenges that need to be addressed.
The challenges of UPI can be categorized into the following
areas:

1. Limited awareness and adoption: One of the main challenges of

UPI (Unified Payments Interface) is the limited awareness and
adoption among the general population. Many people are still not
familiar with UPI and its benefits, which hinders its widespread
usage.

2. Technical issues and glitches: UPI transactions rely on stable

internet connectivity and a smooth functioning of the platform.
However, technical issues and glitches can sometimes occur,
leading to transaction failures or delays. This can be frustrating for
users and may discourage them from using UPI.

3. Security concerns: While UPI offers secure transactions, there

are still security concerns associated with it. Cybercriminals may
attempt to exploit vulnerabilities in the system to gain
unauthorized access or steal sensitive user information. This poses
a risk to users' financial data and privacy.

4. Limited merchant acceptance: Although the number of

merchants accepting UPI payments has been increasing, there are
still many businesses that do not support this mode of payment.
This limits the convenience of using UPI for various transactions,
especially in areas where cash is still the dominant mode of
payment.
5. Network connectivity issues: UPI relies on a stable network
connection to process transactions in real-time. However, in areas
with poor network connectivity or during peak usage times, users
may face difficulties in initiating or completing UPI transactions.

6. Transaction limits: UPI imposes certain transaction limits, such

as daily and per-transaction limits, which can be a challenge for
users who frequently need to make high-value transactions. This
may require users to resort to other payment methods for larger
transactions.

7. Lack of interoperability: While UPI aims to provide

interoperability across different banks and payment service
providers, there are still challenges in achieving seamless
integration between various platforms. This can lead to
inconvenience for users who need to transact across different UPI-
enabled apps or banks.

8. Regulatory and compliance challenges: UPI operates within a

regulatory framework, and compliance with regulations such as
Know Your Customer (KYC) norms can sometimes be a
challenge for users. Additionally, changes in regulations or
policies may require users to update their information or face
disruptions in their UPI usage.

Overall, while UPI has made significant strides in revolutionizing

digital payments in India, there are still several challenges that
need to be addressed to ensure its smooth and widespread
adoption.
LITERATURE REVIEW

The literature on the topic varies from UPI as a digital innovation, how it
plays an important role in solving the issues of digitalization of the
payment services to the social impact of the digitalization on the financial
services. However, the literature on the topic is on the piece meal basic
and does not provide a holistic and cause and effect relationship of UPI
to ED, which is done by the current study. The purpose of literature
review is to prove that the issue of study of UPI for economic
development has never gone ahead of theoretical discussion and confine
to descriptive study only.

The purpose of this literature review is also to explore the relationship of

UPI with other factors to be tested empirically. The work on UPI has
been done theoretically or operationally. In the theoretical studies on
UPI, it explores the possible potential of UPI for larger masses and for its
benefits for digitalization of the financial services . Operational studies
using UPI, discusses mainly its operational strength to be accepted as a
futuristic tool for digitalization to have the mass appeal . But it is
observed by the authors that none of the study empirically talks about the
impact of UPI on the economic development of the poor people.

UPI per se is driven by accessibility, convenience, cost and by removing

the barriers of financial exclusion . Cost and barriers of financial
inclusion are more significantly contributory factors for fintech to
support financial inclusion and economic development Fintech, mobile,
and other technology drivers are very effective in increasing the financial
literacy . Similar arguments can be presented for UPI to support financial
literacy. ICT (information, communication and technology) also supports
economic development . ICT, while supporting economic development,
obviously and positively encourages the financial literacy .
This argument is also further corroborated by the evidence that literacy
also support the economic development . Therefore, it is equally
pertinent to imply that UPI supports the literacy. Thus, the following
hypothesis is formed UPI impacts the literacy (Financial Literacy).
Literature is full of evidence that literacy or financial literacy fully
contribute to financial inclusion . However, there is also evidence that
financial stability is linked with financial literacy and financial inclusion .
RESEARCH METHODOLOGY

The research methodology for this project will involve a

combination of primary and secondary research methods. The
primary research will include conducting interviews and surveys to
gather firsthand insights and opinions from relevant stakeholders
in the field of digital payments, including users, businesses,
financial institutions, and regulators. The secondary research will
involve a comprehensive review of existing literature, research
papers, reports, and case studies related to the prospects and
challenges of Unified Payments Interface (UPI) for digital
payments.

1 ) Primary Research

 Interviews: Conduct structured or semi-structured interviews

with experts, industry professionals, and stakeholders
involved in the UPI ecosystem. These interviews will provide
valuable insights into their experiences, perspectives, and
challenges related to UPI and its impact on digital payments.
 Surveys: Design and administer surveys to a sample of UPI
users, businesses, and financial institutions. The surveys will
gather quantitative data on their usage patterns, satisfaction
levels, and perceptions of UPI, as well as identify any
challenges faced.

2) Secondary Research
 Literature Review: Conduct a thorough review of
academic journals, industry publications, white papers,
 and relevant research studies to understand the existing
knowledge and insights on UPI for digital payments. This
review will help establish the foundation for the project
and identify gaps in the existing literature.
 Case Studies: Analyze and review case studies of
successful UPI implementations in different countries or
regions to understand the factors contributing to their
success and the lessons that can be learned from their
experiences.
 Reports and Official Publications: Examine reports and
publications from regulatory bodies, central banks, and
industry organizations to gather information on the
regulatory framework, policies, and guidelines governing
UPI and digital payments.

3)Data Analysis:
 Quantitative Analysis: Analyze the survey data using
statistical tools to identify patterns, trends, and
correlations related to UPI usage, challenges, and user
satisfaction levels.
 Qualitative Analysis: Analyze interview transcripts and
qualitative survey responses to identify recurring
themes, opinions, and insights related to the prospects
and challenges of UPI for digital payments.
It is important to note that ethical considerations, such as
obtaining informed consent from participants, ensuring data
privacy and confidentiality, and adhering to research ethics
guidelines, will be followed throughout the research process.

Data Analysis and Interpretation

The sampling was taken from 100 people in Kottayam District. All
these 100 people include men and women who are employed and
unemployed.
Demographic factors for the study in Percentage
Table No: 1

Gender Male 56 %

Female 44 %
Total 100%
Age Below 25 32 %
25- 50 58 %
Above 50 10 %
Total 100 %
Income Upto 2.5 lakhs 42 %
2.5 to 5 lakhs 51 %
Above 5 lakhs 7%
Total 100 %
Status Employed 50 %
Business 9%
Households 17 %
Professionals 5%
Students 19 %
Total 100 %

Awareness of Digital payment services in percentage

Table No: 2
E-Payment Services % Ranking
Credit Cards/Debit Cards 100% 1
USSD 0% 6
AEPS 0% 6
UPI 30% 5
Mobile Wallets 34% 4
Internet Banking 62% 3
Mobile Banking 76% 2

Interpretation
100% of the total respondents are aware about debit and credit cards, 76%
of the total respondents are aware about Mobile banking62% of the total
respondents are aware about Internet banking34% of the total respondents
are aware about Mobile Wallet30% of the total respondents are aware
about UPI While none of the respondents were aware of Aadhar linked
payments and USSD.

Preferred to use of digital payment

USAGE
Credit&Debit USSP Aadhar Card
UPI Mobile Wallet Internet Banking
Mobile Banking

27
39

0%
17
2% 15

Figure 1

Interpretations
39% of respondents has used Credit and Debit cards ,27% of the
respondents has used Mobile banking,17% of the respondents have used
Internet Banking,15% of the respondents have used UPI,2% has used
Mobile Wallets while none of the respondents have used Aadhar Cards.
 FREQUENCY
everyday 1-3times 4-6times several times a month Never

14 8

26

30

22

Frequency of usage of digital platform for payments

Figure 2

Interpretation
14% of the respondent have never used digital payment methods, while
8% of them use digital payment daily and 26% and 22% uses it 2-3 times a
month and 4-6 times respectively. And 30% uses several times a month.

Preference of digital payments over conventional

payment methods
PREFERENCE
Maybe
25% [CATEGO PREFERENCE
RY
NAME]
20
Yes
56%
No
19%
[CATEGO [CATEGO
Yes Yes
RY RY
No NAME] NAME] No
Maybe 17 63 Maybe
Figure 3

Interpretation
While 63% preferred digital payment over convectional payment
methods 20% have no opinion and 17% of the respondents were not
bothered.

Useability
number of respondents

44
36
10 10

5 6 7 8
Scale 1-10

Useability

Ease of usage in terms of digital payment according to respondents

Figure 4

Interpretation
It‟s clear that respondents scaled from 5 to 8. 44% rated 7points,36% for
6 points. The rest two points (5 & 8) rated 10% each. Only an average
people says e- payment is ease for use.

% digital transactions

12%
21%
35%

32%

more than 75% 50-75 30-50 less than 30%

Comparison of total transactions to digital transactions

Figure 5

Interpretation
12% of them did more than 75% of their transaction digitally35% did
50 to 75%, 32% did 30 to 50 % and 21% of the respondents did less
than 30% transactions in digital way.
Factors enhancing the use of digital payments
Table No: 3
Factors % Ranks
Ease of doing orders/purchases/ payments 41% 1
Friendly user interface and navigation 33% 2
Tracking of all payments 16% 3
Easy refunds on cancellation 10% 4
Total 100%

Interpretation:

From the above table, it is found that ease of doing payment is the most
preferred factor for enhancing the customers for the use of digital
payment.
Problems and challenges to growth of digital payments
Five point Likert scale
Table No: 4
Problems & Strongly Agree Neutral Disagree Strongly Weighted Rank
Challenges Agree disagree score
Non Availability of 8 24 42 14 12 3.02 7
point of sale system
Lack of strong eco 32 41 17 10 0 3.95 2
system for cashless
payments
Lack of awareness 24 22 25 21 8 3.33 6
Security concerns 36 34 19 7 4 3.91 3
Instability of 26 25 29 12 8 3.49 5
the mobile
network
Cash is still the king 62 32 4 2 0 4.54 1
Additional charges 11 13 36 24 16 2.79 9
Law regulations 21 18 14 31 16 2.97 8
Lack of effective 32 34 10 15 9 3.65 4
complaints and
redressal
mechanism
Interpretation:

The major problem and challenges for the growth of digital payment is
still cash is the king in the transaction aspects which follows lack of
strong ecosystem for cashless payments.

Findings and Conclusion

After conducting the survey, the following were the findings:
 Demographic factors
Majority of the customer belongs to Male, age group lies between 25-
50, income level belongs to 2.5 lakhs to 5 lakhs and 50% of the
respondents belongs to employed group either in government and
private sector.
 Awareness of Digital Payments
The population has adequate awareness about Credit & Debit Cards and
also have awareness about Mobile Banking methods for digital payment
followed by Internet banking. While only considerable number of them
were aware of other methods such as Mobile Wallet and [Link] none of
the respondents were aware of Aadhar linked payment methods, we can
assume that people in Kottayam district are not aware of Aadhaar linked
payment methods therefore more programs is to be implemented in order
to raise awareness of such methods of payments among pubic.
 Preference of usage of digital payment
The commonly used digital payment method is credit and debit cards.
But other forms of payments such as Internet, mobile banking and UPI
are also used by the customers of Kottayam. While only 2% of the
population has used Mobile wallets, due to lack of awareness of Aadhar
card payments if is not used among customers. There is a need to
increase the usage of mobile wallet payment among public by creating
more awareness.
 Frequency of usage
Only 8% of the population uses digital payment methods Daily. This is a
very small figure when India is moving towards a cashless society while
others uses 2-6 times a month., majority of them i.e. 30% use several
times a month.
 Preference of digital payments over conventional payment method
Majority of the populations prefers digital transactions over conventional
methods as per this study.
 Ease of usage in terms of digital payment
Majority rated 7 point out of 10 point as in the ease of usage in terms of
digital payment. As per this study minimum point given is 5 and maximum
point given is 8.
 Percentage of digital transactions
When comparing the total; transaction to that of digital only 12% of the
population use digital payments for more than 75% of their transactions
and only 32% of the population uses 30-50% of their transactions digitally.
This shows that majority of the population does not use much digital
payments for their day today transactions and mostly uses for not
frequently occurring transactions
 Factors enhancing the current use of digital payments
Its found that the main reasons for increased use among existing users are
ease of doing payments and Friendly user interface navigation.
 Problems and challenges to digital payments
The main problems and challenges to digital payment system is the
circulation of paper money and also lack of strong ecosystem for cashless
payments.. Awareness can be given through new programs by the
government to customers to overcome these barriers.
Conclusion
This study was conducted to understand the problems and challenges of
Digital Payment System as India aims towards a cashless society. This
study, conclude that there is an urgent need to implement programs that
raises awareness of digital payment system among customers. People in
general still uses credit and debit cards commonly for digital transactions,
there is an need to increase the usage of other more convenient methods as
well. The fact that more people prefer digital payments over conventional
methods is a positive sign. Some of the ways to improve the digital
payment system are:
• Reducing the cost of transaction and making it completely transparent
to end users.
• Availability of high speed internet to all the strata of the society
• Reduce the complexity to execute certain types of payment systems.
• Increase the security of digital payment methods and establishing
strong regulations.
• Framework for grievance redressal.
• Develop an ecosystem to accommodate customer need
It can be said as we are progressing towards digital India there are various
hurdles to be faced. These needs to be overcome by combined efforts of
government and citizens of the country. The government can make efforts in
expediting the procedure develop a strong security set up which can built
trust among the people. Every citizen should make efforts in understanding
and learning new developments and try to not misuse the technology. These
efforts will help in solving the problems and building trust.
 on 8 September 2016, consequently the bill’s article in the Indian

chamber and its ratification by greater than 50% of the size of it

legislatures (President gives assent to GST Bill, 2016). GST has

replaced the current indirect taxes. The implementation of GST will

have a far-reaching strength on at the point of all the aspects of the

engagement in activity application operations in India. With greater

than 140 countries soon adopting some comprise of GST, India has

daydream been a stand-out exception.

SALIENT FEATURES OF GST:-

1. One Tax for Manufacturing,Trading & Service

2. Reduction in Cascading Effect

3. Inverted Duty Structure Resolved to a great extent

4. More Revenue to government + Lower Burden on Existing Tax

payers : Both are possible

5. Multiple registrations

6. Different points of taxation

7. Online Matching of All Invoices

8. Uniformity among States

9. Goods Vs Service – Dilemma – NO MORE!!

10. Overall Reduction in Prices

11. Common National Market

12. Self regulatory System

13. Simplified Tax Regime

14. Consumption Based Tax

15. Abolition of CST

16. Boost for Make in India – IGST on Imports at full rate

17. HSN Code Based Classification

OBJECTIVES OF THE STUDY

 To understand the concept of GST

 To know the benefits and challenges of GST

 To study the impact of GST on different sectors in India

 TO KNOW HOW GST IMPACT ON

INDIAN ECONOMY.
BENEFITS OF GST :

 It will help in lowering the cost of goods and services.

 Uniformity of tax rates.

 It will help in economic development.

 It will help in making the products and services competitive.

 It may Improve liquidity of the businesses.

 It will reduce the human efforts and will lead to expeditious

decisions.

 It will also help boosting Indian exports in the international

market, improving the balance of payments position.

MAIN FEATURE OF GST ACT

 All transactions and processes only through electronic mode –

Non-intrusive administration

 PAN Based Registration

 Registration only if turnover more than Rs. 20 lac

 Option of Voluntary Registration

 Deemed Registration in three working days

 Input Tax Credit available on taxes paid on all procurements

(except few specified items)

 Credit available to recipient only if invoice is matched – Helps

fight huge evasion of taxes

 Set of auto-populated Monthly returns and Annual Return

 Composition taxpayers to file Quarterly returns

 Automatic generation of returns  GST Practitioners for assisting

filing of returns

 GSTN and GST Suvidha Providers (GSPs) to provide technology

based assistance

 Tax can be deposited by internet banking, NEFT / RTGS, Debit/

credit card and over the counter Concept of TDS for certain

specified categories

 Concept of TCS for E-Commerce Companies

 Refund to be granted within 60 days

 Provisional release of 90% refund to exporters within 7 days

 Interest payable if refund not sanctioned in time

 Refund to be directly credited to bank accounts

 Comprehensive transitional provisions for smooth transition of

existing tax payers to GST regime

 Special procedures for job work

 System of GST Compliance Rating

 Anti-Profiteering provision

 A section 25 private limited company with Strategic Control with

the Government

 To function as a Common Pass-through portal for taxpayers-

 submit registration application

 file returns

 make tax payments

 To develop back end modules for 25 States (MODEL –II)

 Infosys appointed as Managed Service Provider (MSP)

WHAT BENEFITS WE GET FROM GST

 Reduction in Cascading of Taxes

 Common National Market

 Benefits to Small Taxpayers

 Self-Regulating Tax System

 Non-Intrusive Electronic Tax System

 Overall Reduction in Prices

 Simplified Tax Regime

 Reduction in Multiplicity of Taxes

 Consumption Based Tax

 Abolition of CST

 More informed consumer Poorer States to Gain Make in India

 Exports to be Zero Rated

 Protection of Domestic Industry – IGST

CHARACTERISTIC OF GST

 Registration of taxpayers: Every person with a turnover

exceeding Rs 20 lakh will have to register in every state in which he

conducts business. This threshold will be Rs 10 lakh for special

category states (i.e. Himalayan and North-Eastern states).

 Returns: Every taxpayer is required to file tax returns on a

monthly basis by submitting: (i) details of supplies provided, (ii)

details of supplies received, and (iii) payment of tax. In addition to

the monthly returns, an annual return will have to be filed by each

taxpayer.

 Exemptions from GST: There are certain goods and services

which are exempted from GST.

 Taxable amount (value of supply): The GST would be

applicable on the supply of goods and services, whose value will

include: (i) price paid on the supply, (ii) taxes and duties levied under

other tax laws, (iii) interest, late fee, penalties for delayed payments,

among others.
 Payment of GST: The CGST and SGST needs to be paid in the

accounts of the central and states government.

 Goods and Services Tax Network (GSTN):It is a non -profit,

Non-Government Company called Goods and Services Tax Network

(GSTN). It will manage the entire IT system of GST portal.

 Input Tax Credit (ITC) Set Off : ITC for CGST & SGST will

be taken for taxes allowed against central and state respectively.

 GST on Imports : Centre will levy IGST on inter-State supply

of goods and services.

Maintenance of Records : An exporter needs to maintain separate

details of utilization or refund of Input Tax Credit of CGST, SGST and

IGST.
LITRETURE REVIEW

Nitin Kumar (2014) studied, “Goods and Service Tax- A Way Forward”

that implementing GST in India would help in removing current

indirect tax system and expected to encourage unbiased tax structure

which is indifferent to geographical locations. Nishitha Guptha

(2014) in her study stated that by implementing GST would give

many benefits to our country which is not given by current tax

structure and will benefit the economy. Hence GST would benefit the

industry, trade, consumers and Government. Dr. R. Vasanthagopal

(2011) studied,“GST in India: A Big Leap in the Indirect Taxation

System” and concluded that GST is a broad based, single,

comprehensive tax levied on goods and services in which, the seller

may claim the input credit of tax which he has paid while purchasing

the goods, the final consumer will bear only the GST charged by the

last dealer in the supply chain.

How GST transformed the Indian economy?

The 14 year-long journey of the Goods and Services Tax finally

culminated on the July 1 2017, with the implementation of what was

touted to be the biggest tax reform for the country in 70 years of

independence.

While the central government was confident of launching the GST as a

Good and Simple Tax, there were a lot of others who wanted to keep it

away considering it as a half-baked GST regime over the taxpayers.

The implementation of Goods and Service Tax (GST) has transformed

the economy into a digital and standardized one, which in turn will now

help seamless flow of information and availability of common set of

data to both the Centre and the States making the Direct and Indirect

Tax collections more effective.

GST Revenue Drivers and Collection Amounts

GST revenues continue to rise, owing to the number of registered

taxpayers and improved compliance with more returns being filed. This

is facilitated by the implementation of anti-tax evasion measures such as

e-Way Bill, reverse charge mechanism and the much-anticipated system

of invoice matching expected to be put into action by end of 2018.

GST collections peaked in April 2018 at Rs 1.03 lakh crores. This

is much higher than the monthly average GST collection in the last

financial year of Rs 89,885 crores.

Economic Impact
Tax regime has become convenient reducing duplication and

multiplicity of tax filings creating ease of doing business. From a macro-

economic perspective, the government and industry expected that the

GST would be instrumental in reducing economic distortions, which in

turn, would provide necessary impetus to economic growth.

The Ministry of Statistics and Programme Implementation has declared

India’s GDP growth to be 7.7% in 2017-18 compared to 7.1% in 2016-

17. After the initial phase of GST implementation, marginal

improvement was expected given the scale of changes in business and

tax administration that it got along. However, this increase is expected to

be temporary and GDP is projected to settle back in the range of 7% to

7.5% in 2018-19 due to reduction in initial ambiguities.

E-Way Bill

Introduction of e-Way bill was one of the most important steps in the tax

mechanism which mandates all interstate and intrastate movement of

goods to be registered on the e-way bill portal. There were initial

struggles with the GSTN making use of infrastructure owned by

National Informatics Centre. This was rectified through a staggered

implementation of e Way Bills for Intra-State movement of goods.

The stability of the e-Way Bill system is seen by the number of e-Way

Bills being generated over the first 3 months of the new

implementation. The system has steadily generated 2.8 crores to 3.7

crores e-Way Bills, for each month from April 2018 till June 2018. This

system is now stable and can be expected to handle the large number of

e-Way Bills efficiently.

Industry Impact

Exporters:

After the implementation of GST, it has been found out that the export

industry started getting revenue and capital issue within the first month

of its implementation. The export industry faced tough times till

recently, due to non-availability of refunds.

To remedy this situation, the Ministry of Finance organized two

“Special Drive Refund Fortnight”. The first such drive led to sanction of

an amount of Rs 5350 crores of refund, in March 2018 while the second

saw a sanction of Rs 7500 crores. With some technical glitches due to

the input tax credit and exports happening in different months, many

exporters have not been able to file the refund of ITC. The process being

partly electronic and partly manual which made it more cumbersome

and also added to the transaction cost. Total GST refund of over Rs

20,000 crores is pending with the government, as per the Federation of

Indian Export Organizations.

Logistics sector:

The industry segment which benefited most of the GST rollout was the

logistics sector. With check-posts removed, truckers were able to deliver

goods faster leading to quicker turnaround time.

As per a CRISIL Research, trucks are plying an average 25 km more

every day or around 325 km per day. But that is still 20 percent lesser

than the 400 km per day estimated before implementation of GST. In the

United States, a truck runs 800 km per day on an average.

For the transportation and logistics sector, GST is expected to have a

long-term positive impact with consolidation of warehouses, which

will help in improved load availability and drop in vehicle transit time.
RESEARCH METHODOLOGY

Impact of GST on Indian Economy

 It may increase the flow of FDI.

 GST will increase the government's revenue in the long.

 A single tax would help in lowering the final selling price for

the consumer.

 GST will facilitate ease of doing business in India.

 It will reduce the cost of tax compliance and transaction cost.

 It will create more employment opportunities.

 GST would append to government revenues by widening the

tax base.

 Uniformity in tax laws will lead to single point taxation

for supply of goods or services all over India.

 It will also reduce litigation and waste of time of the

judiciary and the assessee due to frivolous proceedings at various

levels of adjudication and appellate authorities.

 Reduce tax burden on producers and build a fire under growth

at the hand of more production. This replicate taxation prevents

manufacturers from producing to their optimum capacity and retards

growth.

 There will be more transparency in the system as the

customers would know exactly how much taxes they are being

charged and on what base.

 GST would also help in removing the custom duties on exports.

Our competitiveness in foreign markets would increase on account of

lower cost of transaction.

 Impact of GST on Manufacturers, Distributor,
and Retailers
GST is a boost competitiveness and performance in

India’s manufacturing sector. Declining exports and high infrastructure

spending are just some of the concerns of this sector. Multiple indirect

taxes had also increased the administrative costs for manufacturers and

distributors and with GST in place, the compliance burden has eased and

this sector will grow more strongly.

But due to GST business which was not under the tax bracket previously

will now have to register. This will lead to lesser tax evasion.

Impact of GST on Service Providers

As of March 2014, there were 12, 76,861 service tax assessees in the

country out of which only the top 50 paid more than 50% of the tax

collected nationwide. Most of the tax burden is borne by domains such

as IT services, telecommunication services, the Insurance industry,

business support services, Banking and Financial services, etc.

These pan-India businesses already work in a unified market and

will see compliance burden becoming lesser. But they will have to

separately register every place of business in each state.

Sector-wise Impact Analysis

Logistics

In a vast country like India, the logistics sector forms the backbone of

the economy. We can fairly assume that a well organized and mature

logistics industry has the potential to leapfrog the “Make In India”

initiative of the Government of India to its desired position.

E-commerce

The e-commerce sector in India has been growing by leaps and bounds.

In many ways, GST will help the e-com sector’s continued growth but

the long-term effects will be particularly interesting because the GST

law specifically proposes a Tax Collection at Source (TCS) mechanism,

which e-com companies are not too happy with. The current rate of TCS

is at 1%.

Pharma

On the whole, GST is benefiting the pharma and healthcare industries. It

will create a level playing field for generic drug makers, boost medical

tourism and simplify the tax structure. If there is any concern

whatsoever, then it relates to the pricing structure (as per latest news).

The pharma sector is hoping for a tax respite as it will make affordable

healthcare easier to access by all.

Telecommunications

In the telecom sector, prices will come down after GST. Manufacturers

will save on costs through efficient management of inventory and by

consolidating their warehouses. Handset manufacturers will find it easier

to sell their equipment as GST has negated the need to set up state-

specific entities, and transfer stocks. The will also save up on logistics

costs.
Textile

The Indian textile industry provides employment to a large number of

skilled and unskilled workers in the country. It contributes about 10% of

the total annual export, and this value is likely to increase under GST.

GST would affect the cotton value chain of the textile industry which is

chosen by most small medium enterprises as it previously attracted zero

central excise duty (under optional route).

Real Estate

The real estate sector is one of the most pivotal sectors of the Indian

economy, playing an important role in employment generation in India.

The impact of GST on the real estate sector cannot be fully assessed as

it largely depends on the tax rates. However, the sector will see

substantial benefits from GST implementation, as it has brought to the

industry much-required transparency and accountability.

Agriculture

The agricultural sector is the largest contributing sector the overall

Indian GDP. It covers around 16% of Indian GDP. One of the major

issues faced by the agricultural sector is the transportation of agri-

products across state lines all over India. GST will resolve the issue of

transportation.

FMCG

The FMCG sector is experiencing significant savings in logistics and

distribution costs as the GST has eliminated the need for multiple sales

depots.

Freelancers

Freelancing in India is still a nascent industry and the rules and

regulations for this chaotic industry are still up in the air. But with

GST, it will become much easier for freelancers to file their taxes as

they can easily do it online. They are taxed as service providers, and

the new tax structure has brought about coherence and accountability in

this sector.
Automobiles

The automobile industry in India is a vast business producing a large

number of cars annually, fueled mostly by the huge population of the

country. Under the previous tax system, there were several taxes

applicable to this sector like excise, VAT, sales tax, road tax, motor

vehicle tax, registration duty which will be subsumed by GST.

Startups

With increased limits for registration, a DIY compliance model, tax

credit on purchases, and a free flow of goods and services, the GST

regime truly augurs well for the Indian startup scene. Previously, many

Indian states had different VAT laws which were confusing for

companies that have a pan-India presence, especially the e-com sector.

All of this has changed under GST.

TYPES OF GST

There are Four GST types namely Integrated Goods and

Services Tax (IGST), State Goods and Services Tax (SGST),

Central Goods and Services Tax (CGST), and Union Territory

Goods and Services Tax (UTGST). The taxation rate under each

of them is different.

The new indirect tax regime under the Goods and Services

Tax (GST) which was rolled out on 1 July 2017, had witnessed a

considerable amount of confusion over how the new taxation

system will affect businesses and the payment of taxes. The

Goods and Services Tax (GST) has subsumed several local taxes

that were levied on goods and services.

Components of GST and its Explanation

The Four Different Types of GST Tax in India are:

 Integrated Goods and Services Tax (IGST)

 State Goods and Services Tax (SGST)

 Central Goods and Services Tax (CGST)

 Union Territory Goods and Services Tax (UTGST)

Additionally, the government has fixed different taxation rates under

each, which will be applicable to the payment of tax for goods and/or

services rendered.

1. Integrated Goods and Services Tax or IGST

 The Integrated Goods and Services Tax or IGST is a tax under the

GST regime that is applied on the interstate (between 2 states)

supply of goods and/or services as well as on imports and exports.

 The IGST is governed by the IGST Act. Under IGST, the body

responsible for collecting the taxes is the Central Government.

 After the collection of taxes, it is further divided among the

respective states by the Central Government.

 For instance, if a trader from West Bengal has sold goods to a

customer in Karnataka worth Rs.5,000, then IGST will be

applicable as the transaction is an interstate transaction. If the

rate

of GST charged on the goods is 18%, the trader will charge

Rs.5,900 for the goods. The IGST collected is Rs.900, which will

be going to the Central Government.

2. State Goods and Services Tax or SGST

 The State Goods and Services Tax or SGST is a tax under the GST

regime that is applicable on intrastate (within the same state)

transactions. In the case of an intrastate supply of goods and/or

services, both State GST and Central GST are levied.

 However, the State GST or SGST is levied by the state on the

goods and/or services that are purchased or sold within the state. It

is governed by the SGST Act. The revenue earned through SGST is

solely claimed by the respective state government.

  For instance, if a trader from West Bengal has sold goods to a

customer in West Bengal worth Rs.5,000, then the GST applicable

on the transaction will be partly CGST and partly SGST. If the

rate of GST charged is 18%, it will be divided equally in the form

of 9% CGST and 9% SGST. The total amount to be charged by

the trader, in this case, will be Rs.5,900. Out of the revenue earned

from GST under the head of SGST, i.e. Rs.450, will go to the

West Bengal state government in the form of SGST.

3. Central Goods and Services Tax or CGST

 Just like State GST, the Central Goods and Services Tax of CGST

is a tax under the GST regime that is applicable on intrastate

(within the same state) transactions. The CGST is governed by

the CGST Act. The revenue earned from CGST is collected by the

Central Government.

 As mentioned in the above instance, if a trader from West Bengal

has sold goods to a customer in West Bengal worth Rs.5,000,

then the GST applicable on the transaction will be partly CGST

and
 partly SGST. If the rate of GST charged is 18%, it will be divided

equally in the form of 9% CGST and 9% SGST. The total amount

to be charged by the trader, in this case, will be Rs.5,900. Out of

the revenue earned from GST under the head of CGST, i.e.

Rs.450, will go to the Central Government in the form of CGST.

4. Union Territory Goods and Services Tax or UTGST

 The Union Territory Goods and Services Tax or UTGST is

the counterpart of State Goods and Services Tax (SGST)

which is levied on the supply of goods and/or services in the

Union Territories (UTs) of India.

 The UTGST is applicable on the supply of goods and/or services

in Andaman and Nicobar Islands, Chandigarh, Daman Diu, Dadra,

and Nagar Haveli, and Lakshadweep. The UTGST is governed by

the UTGST Act. The revenue earned from UTGST is collected by

the Union Territory government. The UTGST is a replacement for

the SGST in Union Territories. Thus, the UTGST will be levied in

addition to the CGST in Union Territories.

Types of GST Tax

The following are the main types of GST which depends on the

following type of transaction:

Inter-State transactions

 This transaction takes place within two different states where

the GST is divided between the Central government and the

state consuming the goods or utilising the service.

Intra-State transactions

 Transaction carried out within the state is known as intra-state

transaction where the GST is divided between the central

government and the state within which the transaction happens.

Here is the list of different tyes of GST based on the type of

transaction:

 SGST (State Goods and Services Tax)

 CGST (Central Goods and Services Tax)

  IGST (Integrated Goods and Services Tax)

 UTGST (Union Territory Goods and Services Tax)

Application of Different of GST

Here is the list of current applications of different types of GST:

 SGST:

Here is the current application of SGST in a more elaborate manner:

A goods purchased by an individual in Maharashtra from a seller of the

state at Rs.10,000 and the GST in this case will be divided into SGST

and CGST. The rate charged for SGST and CGST is 9.00% each for a

total of 18% GST, which makes the final amount Rs.11,800. The total

GST amount will be Rs.1,800 in which will divided into SGCT and

CGST by an amount of Rs.900 each, where the SGST is paid to the

Maharashtra government and the CGST to the Central government.

  CGST:

For the same situation as mentioned in the previous point, the CGST

amount of Rs.900 is earned by the Central government.

 IGST:

Whereas, for the same situation, the IGST amount of Rs.1,800 is

received by the Central government.

Taxes Replaced by GST
The implementation of the Goods and Services Tax (GST) replaced

a number of taxes of both the state and the centre. The levies that

were replaced are listed below:

 Value Added Tax (VAT) or Sales Tax

 Octroi

 Entertainment Tax

 Tax on Lottery or Betting or Gambling

 Purchase Tax

 Luxury Tax

 Service Tax

 Additional Excise Duty

 Central Excise Duty and so on

Categories of GST

Under GST, goods and services are taxed at the following rates, 0%, 5%,

12% and 18%. Certain items such as alcohol, petrol, diesel and

natural gas will be exempt under the GST.

0 percent

Wheat, rice, milk, eggs, fresh vegetables, meat, fish, sindoor, bindi,

stamps, judicial papers, printed books, newspapers, bangles,

handloom, children's' picture, , hotels and lodges below Rs.1000.

5 percent

Sugar, tea, roasted coffee beans, edible oils, cream, skimmed milk

powder, milk food for babies, cashew nuts, spices, packaged food

items, railway freight, life saving drugs, footwear up to Rs 500.

12 percent

Ayurvedic and homeopathic medicines, readymade garments, mobile

phone, non AC hotels, business class air ticket, fertilisers, Butter,

preparations of vegetables, fruits, nuts or other parts of plants.

18 percent

Footwear above Rs 500, hair oil, soap, toothpaste, LPG stove, military

weapons, ice cream, AC hotel that serve liquor, branded garments,

financial services, room tariffs between Rs 2500 and Rs 7500,

biscuits (all categories).

28 percent

Chewing gum, molasses, chocolate not containing cocoa, waffles and

wafers coated with chocolate.

Impact of GST on Indian Economy
 It may increase the flow of FDI.

 GST will increase the government's revenue in the long.

 A single tax would help in lowering the final selling price for the

consumer.

 GST will facilitate ease of doing business in India.

 It will reduce the cost of tax compliance and transaction cost.

 It will create more employment opportunities.

 GST would append to government revenues by widening the tax

base.

 Uniformity in tax laws will lead to single point taxation for

supply of goods or services all over India.

 It will also reduce litigation and waste of time of the judiciary

and the assessee due to frivolous proceedings at various levels of

adjudication and appellate authorities.

 Reduce tax burden on producers and build a fire under growth at

the hand of more production. This replicate taxation prevents

manufacturers from producing to their optimum capacity and retards

growth.

 There will be more transparency in the system as the customers

would know exactly how much taxes they are being charged and on

what base.

 GST would also help in removing the custom duties on exports.

Our competitiveness in foreign markets would increase on account of

lower cost of transaction.

Challenges of GST-

 Robust IT Network: Government has already incorporated

Goods and service tax network (GSTN). It has to develop the entire

IT system of GST portal which will ensure technology support for

GST Registration, GST return filing, tax payments etc.

 Extensive Training to Tax Administration Staff: As GST is

quite different from existing system so it requires extensive training to

tax administration staff regarding the legislation procedure.

Understanding GST intricacies is not easy: The wholesaler would be

required to deposit the CGST into a central government account and the

SGST into the account of the state government. Every docket from

buyers and sellers intend be comprise the GST system suitably to ensure

that benefits accrue the full chain.

Reverse Charge Mechanism

India is a country where there are organized, partly organized and

unorganized sectors, which require continuous monitoring for better tax

compliance and coverage. To carry out this function smoothly, the

government had introduced REVERSE CHARGE MECHANISM.

What is Reverse Charge in GST?

Reverse Charge means the liability to pay the tax by person receiving

goods and/or services instead of the person supplying the goods and/or

services in respect of specified categories of supplies. In India, the

concept of reverse charge under GST is being introduced which is

already present in service tax. Reverse charge under GST may be

applicable for both services as well as goods. Currently, there is no

reverse charge mechanism in supply of goods.

Example A manpower supplier of Company ABC has provided services

to a Company XYZ. Bill charged= Rs. 1,00,000 and Tax liability

(assumption) = Rs. 15,000 (Rs. 1,00,000*15%) Service provider

Company ABC will send a bill of Rs. 1,00,000 mentioning that the

service tax will be bear by the receiver. So, Company XYZ will pay Rs.

1,00,000 to Company ABC and will deposit Rs. 15,000 to the

Government.

Situations under which reverse charge can be applied

1. Services through an e-commerce operator

[Link] dealer selling to a registered dealer In such cases, the

registered dealer is required to pay GST on reverse charge basis for

such supply.

3. Reverse charge under GST on services CBEC has notified a list

of services on which tax shall be paid by the recipient on 100%

reverse charge basis:

• Non-resident service provider

• Goods Transport Agencies

• Legal service by an Advocate/ Firm of Advocates

• Arbitral Tribunal

• Sponsorship Services • Specif

ied Services provided by Government or Local Authority to Business

entity

• Services of a director to a company

• Insurance agent

• Recovery Agent of Bank/FI/ NBFC

• Transportation Services on Import

• Permitting use of Copyright

• Radio Taxi services to E-commerce aggregator (eg: Ola, Uber, etc.)

 DATA RESEARCH

GST RATES AROUND THE WORLD

Table1: GST Rates Around The World

India 5-28%

France 20%

New Zealand 15%

Australia 10%

Canada 13-15%

Malaysia 6%

Singapore 7%

UK 20%

Ukraine 20%

Vietnam 10%

Thailand 7%

Indonesia 10%

Germany 19%

Denmark 25%
HOW GST AFFECT CUSTOMER
GST COLLECTION BY GOVERNMENT
What is GST Collection?

The GST collection trend has been at over Rs.1.4 lakh crore

consecutively in the last seven months, however, the GST revenue

collection has not crossed the Rs. 1.5-lakh crore mark yet on a regular

basis.

The total GST collection in India crossed Rs. 1.5 lakh crores only once

in the month of April 2022 when the GST collection of India recorded

Rs.1.67 lakh crores. Though the August this year collection of ₹1.43

lakh crore is up 28% year over year.

Of the total GST collection in the month of August 2022, Central Goods

and Service Tax (CGST) was Rs. 24,710 crores, State Goods and

Services Tax (SGST) was Rs. 30,951 crores, Integrated Goods and

Services Tax (IGST) was Rs. 77,782 crores (inclusive of Rs. 42,067

crores which were collected on import of goods) and cess was Rs.

10,168 crores (inclusive of Rs. 1,018 crores that were collected on

import of goods).
Contribution to GST Revenue from Various

Business Types:-

GST collection sector has been provided by the government yet,

however, below is the collection breakup as per the constitution of the

business.

Business type Percentage of GST Collection

Public Ltd. Company 34.83%

Private Ltd. Company 27.94%

Proprietorship 13.28%

Public Sector Undertaking 9.64%

Partnership 7.29%

Society/ Club/ Trust/ AOP 1.38%

Limited Liability Partnership 1.18%

Government Department 0.99%

Statutory Body 0.38%

Foreign Company 0.38%

Business type Percentage of GST Collection

Hindu Undivided Family 0.25%

Local Authority 0.21%

Unlimited Company 0.01%

Foreign Limited Liability Partnership 0.00%

Any other body notified by committee 0.00%

Others 2.24%

Total 100%
GST Collection in previous years (2017 onwards till 2022)

Year GST Collection (Rs. In Crores)

FY 2017-18 7,19,078

FY 2018-19 11,77,370

FY 2019-20 12,22,117

FY 2020-21 11,36,803

FY 2021-22 14,76,000
 CONCLUSION

GST will be a very noteworthy step in the field of indirect tax reforms

in India. Multiple taxes are eliminated and there is only a single tax.

GST will make taxation easy for the industries. Customer will also be

benefitted as the overall tax burden on goods and services are

reduced. GST will also make Indian products competitive in the

global markets. GST will be easier to administer. Once implemented,

the proposed taxation system holds great promise in terms of

sustaining growth for the Indian [Link] Goods and Services

Tax (GST) has had a significant impact on the Indian economy since

its implementation. While it has brought about certain benefits, it has

also presented challenges that need to be addressed for further

improvements.

One of the key advantages of GST is the simplification and

streamlining of the indirect tax structure in India. The introduction of

a unified tax
 system has eliminated multiple layers of taxation, such as excise duties,

service tax, and VAT, reducing the complexity and compliance

burden for businesses. This has improved ease of doing business and

enhanced tax transparency.

GST has also contributed to the creation of a common national market

by removing inter-state barriers and reducing logistics and

transportation costs. It has promoted a more efficient allocation of

resources and facilitated seamless movement of goods and services

across state borders. This has stimulated trade and investment,

leading to increased economic activity and growth.

Additionally, GST has played a role in curbing tax evasion and

improving tax collections. With the implementation of a robust

technology infrastructure, including the GST Network (GSTN), tax

administration has become more streamlined and effective. This has

 resulted in improved compliance and increased revenue for the

government, which can be utilized for public welfare and

infrastructure development.

However, the GST implementation has not been without challenges.

The initial teething problems and complexities in the tax structure led

to some disruptions in the business environment. Small and medium-

sized enterprises (SMEs) faced difficulties in adapting to the new

system, primarily due to compliance and technological requirements.

The frequent changes in tax rates and rules also created uncertainty

and compliance challenges for businesses.

Moreover, the multiplicity of tax rates under the GST regime has led

to classification issues and confusion. The complex tax structure with

multiple slabs has caused difficulties in determining the appropriate

tax.
 REFERENCES

1. Dr. R. Vasanthagopal (2011), “GST in India: A Big Leap in the

Indirect Taxation System”, International Journal of Trade, Economics

and Finance, Vol. 2, No. 2, April 2011.

2. Kumar, Nitin (2014). Goods and Services Tax in India: A Way

Forward. Global Journal of Multidisciplinary Studies, 3(6), 216-225

3. [Link]

quick-guide-to-india-gst-rates-in-2017/articleshow/[Link]

4. [Link]

5. [Link]

6. [Link]

gst-on-indian-economy/1525

7. [Link]

8. [Link]

impact-across-sectors-take-a-look-at-the-winners-and-

losers/articleshow/53532907.